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Ramirez v. Midland Funding, LLC

United States District Court, N.D. Illinois, Eastern Division

June 21, 2019

GABRIELA RAMIREZ, FIDELA AVINA, RUEL NIETO, KATHERINE RANOS, and EVALINA GONZALEZ, Plaintiffs,
v.
MIDLAND FUNDING, LLC, MIDLAND CREDIT MANAGEMENT, INC., and ENCORE CAPITAL GROUP, INC., Defendants.

          MEMORANDUM OPINION AND ORDER

          JORGE L. ALONSO UNITED STATES DISTRICT JUDGE

         After plaintiffs received allegedly misleading collection letters sent by defendant Midland Credit Management, LLC, they filed a one-count purported class action complaint alleging three defendants violated the Fair Debt Collection Practices Act (“FDCPA”). Defendants have filed a motion to compel arbitration. For the reasons set forth below, the Court denies the motion to compel arbitration.

         I. Background

         Plaintiffs Gabriela Ramirez (“Ramirez”), Fidela Avina (“Avina”), Ruel Nieto (“Nieto”), Katherine Ranos (“Ranos”) and Evalina Gonzalez (“Gonzalez”) are individuals who applied for and used credit cards whose card agreements contained arbitration provisions.[1] Plaintiffs allege that they were unable to pay their debts and that defendants violated the FDCPA in attempting to collect the debts.

         Gabriela Ramirez and Katherine Ranos

         Ranos opened a Citibank/Sears credit card in 1990. Ramirez opened a Citibank/Sears credit card in 2011. Each was sent, with her credit card, a copy of the Citibank/Sears card agreement.

         The Citibank card agreement contains a choice of law provision which identifies South Dakota as the governing law. (Docket 59-1 at 29; Docket 59-6 at 29) (“Federal law and the law of South Dakota, where we are located, govern the terms of this Agreement.”). In addition, the Citibank card agreement provides, among other things:

This card agreement is your contract with us.
You agree to use your account in accordance with this Agreement. You must pay us for all amounts due on your account. This Agreement is binding on you unless you close your account within 30 days after receiving the card and you have not used or authorized use of the card.
You or we may arbitrate any claim, dispute or controversy between you and us arising out of or related to your account, a previous related account or our relationship (called “Claims”).
If arbitration is chosen by any party, neither you nor we will have the right to litigate that Claim in court or have a jury trial on that Claim.
Except as stated below, all Claims are subject to arbitration, no matter what legal theory they're based on or what remedy (damages, or injunctive or declaratory relief) they seek, including claims based on contract, tort (including intentional tort), fraud, agency, your or our negligence, statutory or regulatory provisions, or any other sources of law; Claims made as counterclaims, cross-claims, third-party claims, interpleaders or otherwise; Claims made regarding past, present, or future conduct; and Claims made independently or with other claims. This also includes Claims made by or against anyone connected with us or you or claiming through us or you, or by someone making a claim through us or you, such as a co-applicant, authorized user, employee, agent, representative or affiliated/parent/subsidiary company.
Claims brought as part of a class action, private attorney general or other representative action can be arbitrated only on an individual basis.

(Docket 59-1 at 27-8; Docket 59-6 at 27-8) (emphasis in the original).

         Ranos used the card. The last time she paid was November 18, 2015. On June 30, 2016, Citibank charged off the account. Ramirez also used her card. The last time she paid was November 26, 2015, and Citibank charged off the account in March 2016.

         Fidela Avina

         Avina opened a Synchrony Bank/Old Navy card in January 2014. Avina was sent, along with her card, a copy of the Synchrony/Old Navy card agreement. She was later sent, with her billing statement, an updated Synchrony/Old Navy card agreement. That agreement includes a choice of law provision in favor of Utah law. (Docket 59 at 6) (“Utah law shall apply to the extent state law is relevant under the FAA.”). That agreement also states, in relevant part:

This Agreement. This is an Agreement between you and Synchrony Bank . . . By opening or using your account, you agree to the terms of the entire Agreement.
RESOLVING A DISPUTE WITH ARBITRATION PLEASE READ THIS SECTION CAREFULLY. IF YOU DO NOT REJECT IT, THIS SECTION WILL APPLY TO YOUR ACCOUNT, AND MOST DISPUTES BETWEEN YOU AND U.S. WILL BE SUBJECT TO INDIVIDUAL ARBITRATION.
What claims are subject to arbitration
1. If either you or we make a demand for arbitration, you and we must arbitrate any dispute or claim between you or any other user or your account, and us, our affiliates, agents and/or The Gap, Inc. if it relates to your account, except as noted below.
*No class actions
YOU AGREE NOT TO PARTICIPATE IN A CLASS, REPRESENTATIVE OR PRIVATE ATTORNEY GENERAL ACTION AGAINST U.S. IN COURT OR ARBITRATION.
How to reject this section You may reject this Arbitration section of your agreement. . . . To reject this section, you must send us a notice within 60 days after you open your account or we first provided you ...

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